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For maximum returns in 2019, investing in Bitcoin was the runaway winner.
If you followed the price of Bitcoin even casually through the course of the year, you know that it was much higher than it is now in the spring. In fact, Bitcoin ended the year down 48% from its June 26 high of $13,879 (according to CoinDesk figures).
But because the Bitcoin price was just $3,693.33 as of Jan. 1, 2019, the No. 1 cryptocurrency logged a gain of 94.4% for the year.
To find a better return, you had to invest in individual stocks, and even then, you'd have to choose very carefully. Only four stocks in the S&P 500 beat Bitcoin's performance in 2019: Advanced Micro Devices Inc. (NASDAQ: AMD) at 148.43%, Lam Research Corp. (NASDAQ: LRCX) at 119.31%, KLA Corp. (NASDAQ: KLAC) at 103.99%, and Target Corp. (NYSE: TGT) at 100.15%.
But no other asset class or sector was even close to Bitcoin. Palladium, up 51%, was a distant second. Oil was up 34%. Gold rose 18.3%. Among stock sectors, information technology was tops at 50.3%.
And 2019 was only Bitcoin's seventh best year out of the 10 it has existed. The best was 2010, of course, when Bitcoin rose 9,567%. The worst was 2018, when the Bitcoin price plummeted 73.56%.
That's one reason many Bitcoin investors just buy and hold (or "hodl," as they say on crypto Twitter). While Bitcoin is extraordinarily volatile, over the long term, it has delivered extraordinary returns...
Why Investing in Bitcoin Was the Best Move of the Decade
It's not easy to estimate Bitcoin's gains from its earliest days, because few people knew of it and there was no way to trade it in its first year of existence (2009).
The next year, though, that started to change. According to BitcoinWiki.org, the first Bitcoin exchange, the long-gone BitcoinMarket.com, started trading March 17, 2010.
For months, one Bitcoin was worth less than a penny. But in July, Bitcoin's first major rally took the price all the way up to $0.08. Still, that represented a five-day gain of 1,000%.
Several articles that appeared at the end of December used that $0.08 figure as the starting point for the Bitcoin price.
When you figure that Bitcoin closed the decade Dec. 31 at $7,188, you end up with a 10-year gain of... 9,000,000%.
You can argue the rate of return was even higher if you go back to when Bitcoin was worth a fraction of a penny. Depending on which figures you use, the 10-year gains can range from 100,000,000% to 459,999,900%.
The S&P 500, meanwhile, ended the decade with a puny 190% gain. The best-performing large-cap stock, Netflix Inc. (NASDAQ: NFLX) could muster only a 4,011% gain over that span.
But is it too late to buy Bitcoin?
I don't think so...
Why the Bitcoin Price Is Going to $100,000 by 2021
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Admittedly, astronomical gains of 9,000,000% or more aren't in the cards anymore for Bitcoin. But Bitcoin is still likely to run much higher - as much as 1,000% or more over the next two years.
Throughout its history, Bitcoin has run in boom/bust cycles. And several factors are lining up for 2020 and beyond that should push Bitcoin up dramatically - to $100,000 by 2021.
First, we have the Bitcoin "halving" expected in May. That's when the reward the miners get for each block they mine gets cut in half from the current 12.5 bitcoins to just 6.25 bitcoins. That means the supply of new bitcoins into the market will be cut in half.
This won't have much impact at first. One or two days' supply isn't that much in the big picture. But over the following months, the effect will become cumulative.
Now, that alone won't necessarily spark a big rally. But I also expect the other side of the equation - demand - to rise dramatically over the next couple of years.
In 2019, we already saw more buying from institutional investors. The CEO of Coinbase said just this week that hundreds of small, institutional investors had signed up for his company's custodial services. And he expects that trend to accelerate this year, with larger institutions coming on board. Larger institutions have more assets. This is something I've been expecting for the past two years, and it looks like 2020 will be the year we see it really take off.
I also think we'll see additional demand from the public, as new technologies that make Bitcoin easier to use - such as the "Lightning Network" - become more mature.
But all that said, Bitcoin isn't the only "crypto" game in town...
These Tiny "Coins" Could Add up to Exponential Returns
Literally thousands of cryptocurrencies have been created over the past few years. The vast majority are not worth your time.
But there are a special group of investments called "specific-use coins."
They exist completely outside of Bitcoin... and this sector provided monster returns in 2019.
- 14,227% in eight months - enough to turn $500 into $71,000...
- 15,572% in two months - that would've turned $500 into $77,000...
- And even 23,032% in four months - that could've turned $500 into $115,000.
People are seeing massive gains from specific-use coins like these in remarkably short periods of time.
To get the full details of everything that's going on, click this link now.
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.